Monetizing Digital Content

Better Strategies for Monetizing Digital Offerings: Thinking Out of the Box while Looking across Industry Silos

Better Strategies for Monetizing Digital Offerings: Thinking Out of the Box while Looking across Industry Silos

Introduction: Dr. Howard Morgan, Co-Founder and Partner, First Round Capital

Monetizing digital offerings is a continuing challenge. Advertising can generally generate only some of the revenue required, so customer payments appear to remain essential for most businesses. Freemium was a good starting point, and now soft pay walls are being tested. Shifting music and film from purchase to subscription is emerging as a sea change.

Paul Smurl, Vice President, NYTimes.com

Shawn Price, President, Zuora.com

Betsy Morgan, President, TheBlaze.com

Richard Reisman, President, Teleshuttle Corporation

What else is new? What can be applied across verticals? Do we need to rethink the value proposition and customer relationship? How successful are strategies to apply social influence and “pay what you want”?

This panel discussion looks broadly at how content businesses such as publishing, music, and video are transforming themselves to achieve economic viability:

Among the issues discussed:
– What strategies are they adopting?
– What can these verticals learn from one-another?
– Do new transaction platform services create new opportunities?
– How far out of the box can solutions go?

Panel Moderator:
– Dr. Howard Morgan, Co-Founder and Partner, First Round Capital

Panel Speakers:
– Betsy Morgan, President, TheBlaze.com
– Shawn Price, President, Zuora.com
– Richard Reisman, President, Teleshuttle Corporation
– Paul Smurl, Vice President, NYTimes.com

The Platform Wars

Google, Facebook, Apple, Amazon, and Microsoft wage war. What it means for Advertisers.

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Timothy Wu, noted Internet expert and author of The Master Switch, believes that the Internet is slowly moving into an age of greater consolidation, following the footsteps of the radio, film and other information industries before it.

The current stage is characterized by serious tension between four or five platforms – Google, Facebook, Apple, Amazon, Microsoft – striving for dominance.

What business models – open or closed – will have the upper hand? Will platforms based-on per unit sales or advertising-based models triumph? And what does it all mean for advertisers?

Presented by Timothy Wu, Professor of Law, Columbia University and Author of Master Switch: The Rise and Fall of Information Empires

Venture Capital Investing in 2011

Three leading New York venture capital firms provide their strategies for 2011.

Three leading New York venture capital firms provide their strategies for 2011. Understanding venture capital firms’ strategies is critical in order to obtain venture capital. Prior to the panel discussion, PricewaterhouseCoopers presented a summary of the 3rd quarter 2010 MoneyTree Report.

Venture Capital Investing: VC Investing By Year, Industry, Region, etc

The MoneyTree Report is a quarterly study of venture capital investment activity in the United States. As a collaboration between PwC and the National Venture Capital Association based upon data from Thomson Reuters, it is the only industry-endorsed research of its kind. The MoneyTree Report is the definitive source of information on emerging companies that receive financing and the venture capital firms that provide it. The study is a staple of the financial community, entrepreneurs, government policymakers and the business press worldwide.

Venture Capital Investing: Panel Introduction

 

Venture Capital Investing: Bubble or Not?

 

Venture Capital Investing: Hot Sectors in 2011

 

Venture Capital Investing: Investment Strategy for 2011

 

Venture Capital Investing: Audience Q&A

 

Among the issues discussed were:
– What types of companies will VC’s fund in 2011?
– What are the hot sectors for 2011?
– What characteristics are VC’s looking for in an early stage company?
– How robust is the start-up community in New York City?
– What is the likelihood of a recovery of the IPO market and how does this affect a VC’s strategy?
– How is the rise of the “super angel” affecting VCs?
– VC funds have had a weak ten year period overall (with the industry, though not all funds, being down for the period). How is this affecting the VC’s ability to raise fresh funds?
– Given the “lighter” startups, is the average VC investment decreasing in size? Is the average VC fund size decreasing?
– What is your specific investment strategy for 2011?
– What are the other hot trends in venture capital for 2011?

Panel Moderator:
– Ben Boissevain, Managing Partner, Agile Equity

Panel Speakers:
– Steve Brotman, Managing Director, Greenhill & Co.
– Alex Ferrara, Bessemer
– John F. Frankel, Managing Partner, ff Asset Management LLC

Online Video Analytics and Advertising

TubeMogul’s Brett Wilson gets in the hot seat to talk about trends in online video.

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I sat down with Brett Wilson, CEO of TubeMogul, a video analytics company based in San Francisco, to talk about metrics, measurement and analytics.

TubeMogul is about to add a demographic reporting tool to their platform that will allow publishers to see exactly who is consuming their content – male, female, head of household, auto intenders, etc. They will do so by marrying offline data from third party data partners with online information. Publishers can then share this information with advertisers to confirm that they are reaching who they intend to reach.

TubeMogul will also soon add near real time analytics (15 – 30 minutes after the data is collected), which will allow publishers and advertisers to see, fairly instantaneously, what is happening with their online videos and video ads so that they can take action. For example, if a video is going viral, the publisher can promote the video to the site home page.

Analytics are moving towards being more decision oriented rather than just reporting on what happened. Video analytics will help organizations use the data in real time to make decisions, and automate business decisions based on business rules (if this happens, then do that). In the above example, the business rule could be that if the video is trending towards going viral, say if it has 100,000 views in a certain period of time, such as an hour, then the video will automatically be pushed to the home page.

Most video publishers currently do not have additional inventory. They’re already sold out. So they care about getting audience and performance information that they can share with their advertisers to justify higher CPMs.

TubeMogul is also working on engagement metrics, such as who is sharing a video or who is tweeting the video.

TubeMogul recently did a study with Dynamic Logic to explore the effectiveness of a repackaged 15 – 30 second TV spot online and longer form video advertisements (60 – 90 seconds) made specifically for the web. They found that the 15 – 30 second ads, typically delivered as preroll, are more effective for branding, whereas the 60 – 90 second spots, typically in a display advertising box on the side of a Web page, are more effective at driving purchase intent.

Generally, I think the next few years will mark the beginning of real time analytics that allow companies to:

  • make sense of disparate silos of data and information to forecast future possibilities based on past or current data sets,
  • ping business stakeholders based on current data-related events,
  • set up business rules to automatically take certain actions based on various scenarios that are confirmed by the data, and,
  • make predictive decisions based on the real time information that will be at every business stakeholder’s finger tips.

What kind of competitive advantage will your company have if you can make sense of and react to your data just a little bit faster than the competition?

Google TV and the Death of the Cable MSO

What can Google TV do for TV Networks that Cable Companies Can’t Do?

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James McQuivey, VP, Principal Analyst, Forrester Research, moderated a panel about Google TV at the Streaming Media West conference in Los Angeles. Google TV is in a race to own the living room of the future by giving consumers an easy and fast way to search content, navigate television channels, and bring online video to the forefront of the TV experience.

Combatants intent on owning your living room experience include your friendly neighborhood cable company, Google (Google TV), Apple (Apple TV), Microsoft (Xbox), Sony (Playstation), Boxee, Roku, every flat screen TV manufacturer, and even Western Digital (WDTV), the hard drive maker.

I sat down with James after his session to talk about the boob tube, which will soon be the epicenter of the lean back AND lean forward home entertainment experience, allowing us to watch (and listen to) everything from basic and premium cable channels to on-demand video, Hulu, Netflix, Blockbuster, Pandora, TiVo, Youtube, Blip, and Vimeo, access home videos and family photos from network enabled hard drives in the home, and socialize with our friends around the content we share and consume.

While Google does not try to portray itself as a threat to cable and satellite operators, Google TV, and its competitors, will soon challenge the traditional masters of the living room TV experience.

Google TV doesn’t come cheap. The Intel chips required to run Google TV are in the $40 – $50 range, which is in stark contrast to the $5 chips in the typical TV or cable Set-top box. But once someone has a Google TV box, the things you can do with Google TV make the cable box experience seem like an antiquated Atari gaming console in comparison.

Cable boxes just don’t have the computing power to do much of anything that requires advanced processors and memory. And cable operators aren’t about to roll out more expensive, powerful boxes any time soon. Google TV, and similar services from Boxee and Apple, will soon replace the cable program guide with an improved user interface and a breadth of features to make searching, finding and consuming content a joyful Television experience, regardless of where the content comes from (Cable, Web, DVD Player, TiVo, local hard drive). As shown below, users can search for their favorite programs using the Google TV search interface and get results that include a variety of platforms and devices.

For the right to dig up roads and lay miles of cable in communities around the US, cable operators have to abide by very strict consumer protection regulations, enforced by the FCC. Cable operators are not allowed to use household data and share that data with advertisers.

Google’s hands aren’t tied in the same way. In a Google TV world, addressable advertising is an unregulated reality. Google can collect personal information about people (and anonymize it of course!) in a way that is prohibited to the MSOs. The MSOs have talked forever about being able to deliver targeted advertisements to the household level. We’re still waiting. Google TV, on the other hand, is capable of providing such a holy grail scenario to brand advertisers and the broadcasters that attract eyeballs on behalf of advertisers.

You can put money on the fact that at some point Google will start to integrate advertisements into the search process. For example, as I search for Burn Notice or Entourage, Google will display an ad based on what I’m searching for and who I am, in real time.

My guess is that at some point we’re going to see an inflection point in the relationship between networks, such as ESPN, FOX, TNT, MTV, and Cable and Satellite operators, such as Comcast, DISH, Time Warner and Cablevision. Historically, the MSOs have been the primary delivery channel to get ESPN programming to massive audiences. And the networks had enormous interest in earning their per subscriber carriage fees from the MSOs.

ESPN costs distributors more than $4 per subscriber. The Comcasts of the world are willing to pay this carriage fee because they have exclusivity on the content in the markets they operate in. However, at some point, ESPN will renew its contract with a distributor, such as Time Warner, and decide that it no longer wants to provide exclusivity, because it can make $1, $2, $3, $4 per subscriber through other channels – the ESPN.com Web site, Google TV, Youtube, Mobile Operators, iTunes, FLO TV. At that point ESPN may be willing to negotiate out the exclusivity part of the agreement with MSOs, and be willing to take less money per subscriber, say $2, because ESPN can make the lost revenue up through all the other channels of distribution and monetization that are available to it.

Maybe the ESPN Insider fee goes up and subscribers also get the live broadcast. Maybe I can subscribe to ESPN for $4 per month on an a la cart menu right from my Google TV dashboard, which already has my credit card on file so that the process is a 1 click experience to activate, on a channel by channel basis, or even a show by show or episode by episode basis, anything I want to watch.

Anyway, Google TV may not be the answer. But something like it will be. And we’re about to reach a tipping point where broadcasters grow some balls and decide to play chicken with MSOs, the hand that currently feeds them. The broadcasters that win this staring contest will have free reign to aggressively explore multiple revenue models without fear of upsetting the Cable Co’s.

And then we’ll really see some innovation.

Transmedia Storytelling

Jeff Gomez, CEO of Starlight Runner Entertainment teaches a Transmedia Master Class.

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Transmedia development, production and implementation is now fully in practice at the highest levels of companies such as Disney, Saban, Microsoft and Mattel. Around the world, visionaries are generating stunning multi-platform endeavors based on the principles of transmedia. Jeff Gomez, CEO of Starlight Runner Entertainment, is the world’s foremost expert at developing entertainment properties and premium brands into highly successful transmedia franchises. He has worked on such properties as Pirates of the Caribbean, Avatar, Coca-Cola’s Happiness Factory, Halo, Transformers and the upcoming Tron Legacy.

In this, his first Master Class, Jeff candidly shares his latest experiences in the field funding, planning, creating and producing highly engaging story worlds that maximize both the creative potential of your work, equity participation and subsequent revenues. Case studies include analysis of some of the biggest entertainment franchises of today, and the discussion includes advice on how to apply these concepts to your own projects, large or small, fact or fiction.

Transmedia Storytelling Part 2

Transmedia Storytelling Part 3

Speakers

JEFF GOMEZ
CEO, Starlight Runner Entertainment

Jeff Gomez, CEO of Starlight Runner Entertainment, is the world’s foremost expert at developing entertainment properties and premium brands into highly successful transmedia franchises. As a creative consultant to Fortune 500 companies, he contributes strategic planning and production for the cross-platform implementation of content.

Jeff conceived, co-wrote and produced one of the most successful transmedia storylines of the decade with Mattel’s Hot Wheels comic books, videogames, web content and animated series. He has gone on to work with such franchises as Pirates of the Caribbean and Tron Legacy for The Walt Disney Company, James Cameron’s Avatar for 20th Century Fox, Halo for Microsoft, Happiness Factory for The Coca-Cola Company, Transformers for Hasbro, and most recently Men in Black 3 for Sony Pictures.

Jeff is a member of the Producers Guild of America (PGA) East Executive Committee and serves on the national board of the PGA New Media Council.

Brent Weinstein
Head of Digital Media, United Talent Agency
Brent is one of the leading figures in the digital media industry, helping develop content deals for broadband, videogame, and mobile platforms. He formed the digital media practice at United Talent Agency in 2003, where he leads a team of dedicated digital media agents to identify and evaluate opportunities for UTA clients: actors, writers, directors, producers, and recording artists, in addition to many business-to-business and consumer-oriented technology and corporate clients. Brent, with UTA co-founder and partner Jeremy Zimmer, also formed UTA Online, a dedicated broadband division that finds and represents the next generation of web-based content artists. In 2007, Brent served as the CEO of 60Frames, a privately-held, venture backed company dedicated to financing, ad sales and syndication of original professionally produced entertainment content for the internet. The company was incubated by United Talent Agency and Spot Runner, an innovative internet-based advertising agency.

During his tenure at UTA, Weinstein made digital media deals for many of the best known artists in entertainment, including Johnny Depp, Jack Black, Jim Carrey, Dwayne “The Rock” Johnson, as well as top digital media artists such as Big Fantastic (“Prom Queen”), AskANinja (askaninja.com), and others.

Prior to joining UTA in 2001, Weinstein practiced corporate and business litigation in Los Angeles and Irvine, California. He is a graduate of the University of Southern California, where he earned a Bachelors degree in Business Administration, and the University of San Diego School of Law.

Building the 360 Degree Network

Geraldine Laybourne, founder of Oxygen Media talks about how on-air programming integrates with new media channels.

The expansion of Internet and mobile video distribution in the past few years has made television executives rethink the very concept of the T.V. network, and how on-air programming integrates with its burgeoning new media channels.

One woman has actually executed successfully on this vision more than once in the past 20 years: Geraldine Laybourne. From her groundbreaking work in the launch of MTV Networks and Nickelodeon – including one of the first active new media divisions at a major media conglomerates to her pioneering efforts with Oxygen Media, the first on-air/online T.V. brand, Laybourne has delivered on the promise of 360-degree programming with an eye always toward the future.

Laybourne offers a rare view into how the creative process can be applied to building sustainable, evolving programming entities in a multi-screen universe.

About Geraldine Laybourne

Geraldine Laybourne is the Co-Founder of Oxygen Media, a 24-hour cable television network for young women. She served as Chairman and CEO of Oxygen Media until she sold it to NBC Universal in 2007.

Gerry was a cable programming pioneer in the 80’s and 90’s: she lead the team that created Nickelodeon and Nick at Nite. She also served as president of Disney/ABC Cable Networks (from 1996-1998) where she ran cable programming for the Walt Disney Company and its ABC subsidiary.

Ms. Laybourne has been singled out for her many contributions to the industry. She was ranked No. 1 among the 50 most influential women in the entertainment industry by The Hollywood Reporter in 1996 and named one of the 25 most influential people in America by Time magazine that same year.

She serves on the Board of Directors of Electronic Arts, J.C. Penney, Symantec Corporation, Move.com and The White House Project. She is the incoming President of the AAVC and on the Board of Trustees of Vassar College. She is a corporate ambassador for Vital Voices. And advises many women lead startup companies. She and her husband Kit, a teacher, producer, and author, have two children and three grandchildren.

Moderator: Cindy Pound, Delegate, PGA New Media Council National Board

Cindy Pound is one of the leading online and mobile producers working today. She currently serves as Executive Producer for R/GA’s mobile and emerging platforms group, where she leads the development of next-generation creative production for R/GA’s clients. She was previously Vice President, Client Services for netomat, a mobile content community builder that developed user-generated content experiences, SMS campaigns, and mobile web sites for Fortune 1000 companies. She was a founding employee of Razorfish, one of the leading digital agencies in New York, where she served as Executive Producer for large-scale broadband campaigns for the likes of CBS, Charles Schwab, Christie’s, Microsoft, Sony, the Smithsonian Institution, and Ralph Lauren, among others.

Content-As-A-Service: The Next Realistic Business Model

The rules of making money in the digital age have changed.

Consolidation is a natural phenomenon in maturing markets, especially those markets where disruptive channel changes are occurring. The world of content is no different as evidenced by the growth of mega-media conglomerates and the proposed sales of magazines – think Newsweek in recent headlines.

However, even for the consolidators the rules of making money in the digital age have changed. Paywalls are sprouting left, right and center, but there is considerable debate of how to profit from digital content while still retaining and strengthening relationships with end-users. Having watched the implosion of the music business from a ringside seat, I would recommend some key concepts that matter for all content genres.

Access Charges Are Dead: Charging simply for access is a losing proposition, especially in the hard news category. The reality is that intellectual property and access are almost too cheap to monetize. This is driving a shift to selling content as a service. As an interesting example, a company I recently talked with is contemplating launching a political blog with content from well-known and respected political pundits. Rather than charge a subscription fee for access to the content (which might limit the network effect), their plan is to charge a recurring fee to post comments on the blog entries. This will both provide a greater immersive experience and help with screening out people who don’t “contribute” to the debate. Simultaneously, this social goods monetization enables commenters to create affinity with “high-status” folks and raise their own profile and visibility.

Aggregation and Disintermediation Are Both Relevant: But in ways far different than before. If you are a content aggregator, by simply making your content easier for your audience to use and consume, you greatly increase the relative value of your service. Don’t simply be a pipe (see #1.) It was completely unsurprising to me that Netflix would pay $1 million for improvements to their recommendation engine because they understand their value is in providing services that lets customers figure out what to watch next. How much value would cable companies bring if customers had direct payment access to the underlying shows? And if customers had access to that show across different devices?

Price Discriminate: Understand what people are willing to pay for and use that information to price appropriately. There’s a reason why airlines use dynamic and very variable pricing. While digital content doesn’t suffer from the same scarcity (i.e., there are finite # of seats), content consumers will pay for different experiences and services associated with that content. Your job is to test and determine what those thresholds are and how those customers psychographically identify themselves.

Don’t be Shy to Ask for Money: As a corollary to #1, don’t assume content has to be free and that your business model has to be advertising-driven. Quite the contrary, assuming you’ve built a compelling experience for consumers you should assume that people will pay. In fact, setting a price point of zero devalues the content service you are providing. There’s a reason that many online games continued to show strong worldwide growth despite the economic recession – the immersive experience, the social elements, in addition to the game mechanics – all provide a reason for customers shelling out $15/mo for a subscription or spending a few dollars each month buying and using virtual currencies and goods.

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The shift to content delivered as a service takes a slightly different mindset. Many in the content business have assumed that Google Search is their competitor. I posit that it may really be Google Reader and Instapaper that are the real competitive threats. When major media companies begin to look inward at their strengths and assets, it would seem to me that they should be able to provide content services that cause “aha!” moments that pull me away from aggregating RSS feeds. When major content companies focus on creating services that target articles and blog posts to individual customers as well or better then their ad serving partners do, then they are on the right path to services worth paying for.

The Business of News and Devices with Rafat Ali

paidContent Founder Rafat Ali discusses potential subscription models for newspaper Web sites, what magazines need to do to leverage iPad and tablet devices, and ponders the original content creator versus aggregator divide.

Some say an interview with ScribeMedia.org is the kiss of death.

In the past week Jeff Hayzlett, Chief Marketing Officer for Kodak, appeared with us and then announced he’s leaving the company. Then, we interview paidContent founder Rafat Ali days before he announces his departure from paidContent.org and ContentNext Media.

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Trust us, it’s a coincidence. Really, it is.

It’s just that a lot can happen in a week.

Rafat though comes through in a wide ranging interview that touches on a number of moving parts in the media ecosystem. This includes the Wall Street Journal’s existing subscription model and attempts by the paper to increase its reader base to a more general audience; the New York Times and its move toward their planned subscription model early next year; and a few pokes at news aggregators like the Huffington Post and Newser.

What we find interesting though are his thoughts on the iPad experience that come about halfway through the interview.

It’s not the savior of the magazine industry as some might hope, Rafat argues. “I think they will be disappointed at the end of the day.”

“I think it’s a little silly that adding interactive elements will make [a magazine] readable. If you don’t read it online, and don’t read it in print, you won’t read it on the iPad either.”

Instead, the device is better used for media consumption through applications like that created by Netflix.

At the end of the day, this may leave room for Amazon’s Kindle which Rafat calls “a more peaceful experience.”

Not that he expects the physical device to be the dedicated delivery system in the next few years. Instead, he expects the Kindle software to be everywhere, be it in a dedicated e-reader, mobile device or tablet.

Amazon is, after all, in the business of selling books, not in producing electronics.

Anyway, we wish Rafat well in his future endeavors and send him off with a kiss… of life.

Magazine iPad Apps? We’ve Played this Game Before

The holy grail for Web designers has always been the pixel perfect layout afforded in print design. Some publications jumped to Flash in order to replicate the print experience. That experiment was a failure. Enter the iPad.

GQ iPad sales figures came out the other day. They’re a bit confused. Initial reports read that 365 December “Men of the Year” iPad issue were sold. Later, VentureBeat clarified and wrote that 52,000 GQ Apple apps sold since December.

It’s a long way from 365 to 52,000 and as VentureBeat points out, GQ publisher Condé Nast doesn’t have a breakdown of which apps sold on which device. Meaning, Apple doesn’t provide analytics for anyone — let alone the publisher — to know whether they’re having success on the iPad or iPhone/Touch. This is a problem of course, and one that mobile analytics provider Flurry tries to reconcile.

But while 365 might be low, the iPad as magazine delivery system isn’t going to be the publishing savior hyped by hopeful insiders over the past few months. It’s been said before and is worth saying again: thinking a device saves an industry is a losing proposition.

Outside the novelty factor, few consumers who’ve left print for the Web are going to start paying for a magazine just because it’s on a new form factor. Once the novelty wears off, readers will settle back in where the content is free.

And while novelty can add incremental income, incremental income isn’t significant income. Listen to what GQ VP/Publisher Pete Hunsinger told the magazine trade publication min, “This costs us nothing extra: no printing or postage. Everything is profit, and I look forward to the time when iPad issue sales become a major component to our circulation.”

Hunsinger’s general point stands: digital product distribution is a great thing, but there are development and marketing costs with an iPad app so production isn’t a freebie. Besides, who among us expects him to come out, scratch his head and complain, “365? WTF?”

But compared to the hype of the iPad as a potential publishing bonanza, the implication of GQ’s sales numbers — be they 365 or 1,365 — are disappointing although I hedge with the caveat that it’s very early in the iPad’s lifecycle (about a million sold), and in publisher attempts to create something of value that people will pay for.

Most I talk to say it’s not magazine applications that are interesting, but video from Netflix and productivity applications like Apple’s iWork suite. This leads me to wonder if trying to recreate the magazine experience on a digital device is a bit of a fool’s errand. If it’s content people want, a Web browser sits about anywhere these days for people to get it.

Besides, we’ve played this game before.

The holy grail for Web designers has been the pixel perfect layout afforded in print design. A number of years ago some publications jumped to Flash in order to replicate print layouts but that experiment went nowhere. Publishing services like Issuu and Zinio are still trying to make that model successful today by giving content developers the means to replicate their print design in a Flash interface.

The results? Novel and interesting, but clunky from a usability standpoint. Don’t believe me? Try Sporting News Today.

There’s no doubt that magazine iPad apps do make content visually beautiful, but publishers are essentially asking readers to pay for a design iteration. Are there really enough people with such nuanced design sensibilities to make that a business model?

Of course, design and photo heavy magazines have a leg up in this regard. While Steve Jobs might be offering a world free from porn, I see Sports Illustrated swimsuit issue selling well. So too titles like Wallpaper, Dwell and Monocle that rely on the visual to begin with.

For the rest of us, our iPad apps need to be something in addition to content already available on the Web.

This includes supplemental material (eg., think datavisualizations and interactive graphics, photos that didn’t make the print or Web editions, audio or video clips, etc.) and actual applications (eg., geo-based and social networking services surrounding the content) that people will pay their few dollars for because they can’t get them anywhere else.

If we don’t do that, if we don’t add true and differentiating value separate from the content we already offer, we just spin our wheels playing with the next new thing that’s shiny and bright.